Procurement Lessons From the Lambton Arms

We’ve featured my cousin Kathryn’s pub (run with her husband Harry) in Sherburn Village a couple of times previously, with pictures in our “Down the Procurement Pub” feature.

But we thought it was time we actually dived into the procurement angles around running your own free-house in a mid-sized semi-rural ex-mining village in the North-East’s former coalfield.  The village is not yet overly gentrified, but being only three miles outside Durham City has a mix of commuters, locals, older folk and village “eccentrics”.

Kathryn was a nurse, Harry a roofer, so neither had much relevant experience when they took on the Lambton Arms, but in many ways, they have shown admirable commercial sense in succeeding in a business where hundreds of pubs a year go out of business. And they haven’t done it by going all gastro-pub either – it is crisps and nuts other than the traditional Sunday roast! So here are Kathryn’s words of procurement wisdom.

Total cost of ownership
“The wholesaler we buy most of our beer from is very flexible. They’re not really the cheapest but I can phone up and they will deliver that day. So, if we need some stock quickly (a big match on the TV maybe) we can get that, but I don’t have to hold a lot of stock, or risk stuff going out of date”. Price is not the only factor – look at the whole range of lifetime costs.

“I hate paying delivery charges. The wholesaler we buy our meat from delivers free, and I save time, effort and cost”. (Kathryn and her small team only serve food on Sunday lunchtimes, when their lunches feed pretty much the entire village).

“We’re loyal with our beer supplier but usually buy spirits in particular from the supermarkets. I check the prices at Tesco, Asda regularly and will buy Gordons gin or Smirnoff vodka when they have special offers on. Their prices are usually better than the wholesalers. We shop around, you can’t be too loyal when there are big  price differences”.

Keep close to the customer
“There is the usual range of beers and lagers, and regulars who will buy the same thing day after day, year after year. But there are trends. Toffee vodka went mad for a while – now we just can’t shift it. Gin is the big thing in 2018, particularly coloured gins, rhubarb and ginger and now violet is the latest. But you have to be careful – we’ve got quite a lot of the rhubarb and ginger in stock …!" (I’ll take the odd bottle off your hands if you insist …the Smith household has got into gin quite heavily in recent years! It’s also worth noting that real or craft ale has not really caught on in Sherburn. I’m trying to at least get them to try Punk IPA in bottles…)

But recognise customers are not always logical
“Some pubs and other venues will buy Aldi’s gin, which has won many awards and put it into Gordons optics to fool the customers – we won’t do that. But if I served Aldi’s product, my regulars would say “no, I want Gordons” even though the Aldi product is probably just as good. It’s not logical but you have to give them what they want". (A great demonstration of the power of brands! And a bit like the director, who wants to engage McKinsey,  even if you can show a smaller consulting firm knows more about the topic under review…)

Use the experts
(We asked about other spend areas – energy for instance). “I went to school with a chap who became an energy broker. He gets us the best deals – he is retired in Spain now, so he must know what he’s doing! (How much does he charge?”) Don’t be silly, I went Shadforth Junior School with him"! (So, the old boys “it’s who you know” approach applies even here. But the key point is to recognise where you really do need expert input in particular complex categories).

We also talked about Wetherspoons and the treatment of pubs versus retailers in terms of taxation – let’s save that for another day. But it’s also worth saying that Kathryn and the pub clientele have raised a huge amount of money, probably over £100K in the last decade, for the local St. Cuthbert’s hospice, winning national major “best charitable pub” awards along the way.

Last month the Lambton Ladies participated in the midnight walk for the hospice, raising thousands more. That’s a big part of their success – being part of the community.  The picture above shows me being rather embarrassed to win the weekly raffle, which raises more money.  I won £20 but the "key" I chose didn't open the magic lock luckily, or the locals might not have been pleased with an outsider winning the grand prize.

Anyway, we suspect that being seen to have a purpose beyond selling beer has helped the business, as well as the hospice. So maybe there is a read-across there to the “procurement with purpose” initiative that we and others have been writing about and acting on this year.

Anyway, many thanks to Kathryn, and do mention my name if you pop into the Lambton Arms, Sherburn Village. You might just get 50p off a double Ginger and Rhubarb G&T!

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